The Peter Principle resuscitated: are promotion systems useless?

• Author: Janet Romaine
• Date: 01 November 2014
• Published date: 01 November 2014
• DOI: http://doi.org/10.1111/1748-8583.12034

The Peter Principle resuscitated: are promotion

systems useless?

Janet Romaine, Saint Anselm College

Human Resource Management Journal, Vol 24, no 4, 2014, pages 410–423

The challenge of developing and maintaining an effective organisation is intimately linked with HR

activities that include selecting and motivating employees. Many organisations engage in an internal

selection process designed to fill upper level positions with employees who have proven their worth at

a lower level in the organisation. However, some observers have questioned whether this approach

actually results in optimal individual and organisational performance. Using the Peter Principle as a

starting point, this article examines the evidence for problems with merit-based promotions, as well as

various explanations that have been advanced for why these problems occur. This article then proposes

a new model, based on contemporary management theory and evidence, which addresses the question of

why promotions fail.

Contact: Dr Janet Romaine, Economics and Business, Saint Anselm College, 100 Saint Anselm

College Drive, Manchester, NH 03102, USA. Email: jromaine@anselm.edu

INTRODUCTION

The Peter Principle states that ‘In a hierarchy, every employee tends to rise to his level of

incompetence’ (Peter and Hull, 1969: 25). Although many organisational theorists have

either ignored the Peter Principle or treated it as a joke (Jones, 1983), it has received

serious investigation and a measure of validation over the past 40 years (Kane, 1970; Schaefer

et al., 1979; Phelan and Lin, 2001; Lazear, 2004; Acosta, 2010; Pluchino et al., 2010). At the same

time, managers and management theorists continue to espouse the benefits of promoting the

best performers (Beehr et al., 2004), which is seen as a way to reward good performance and

motivate other employees (DeSouza, 2002). On one level, this difference of opinion on the

effectiveness of internal promotion could be seen as a dispute between economists, who

downplay the role of motivation and interpersonal factors on individual employee

performance, and management researchers, who focus on social and psychological drivers of

behaviour. But as an empirical question, which view is more accurate? Obviously, the answer

has crucial implications for how organisations make personnel decisions.

This article will first examine theoretical and empirical approaches that claim to examine

the Peter Principle (although they sometimes redefine it in ways that Laurence Peter might

not have approved). Next, it takes up the central question raised by Peter’s original

statement of the principle that bears his name: why should someone who performs well at

one level of an organisation fail to perform at a satisfactory level after being promoted? This

article develops an explanatory framework based on person–environment fit and describes

factors that seem like plausible candidates for explaining the shift from success in one job

to failure in the next.

The approach taken here is ‘model-theoretic’ (Harris et al., 2013). That is, the model does not

attempt to comprehensively account for every possible cause–effect relationship that could give

rise to employee failure after a promotion. Rather, it uses existing theoretical frames

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doi: 10.1111/1748-8583.12034

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 24 NO 4, 2014410

© 2014 John Wiley & Sons Ltd.

Please cite this article in press as: Romaine, J. (2014) ‘The Peter Principle resuscitated: are promotion systems useless?’. Human Resource

Management Journal 24: 4, 410–423.